News in Mining

Do Your Due Diligence

According to reports, once-bankrupt Magnetation is closer to bringing idled operations back online outside of Grand Rapids. This means the company would start producing concentrate in Q2 and pellets (for iron) in Q3. The delay of over a year apparently resulted from lack of compliance with federal Clean Air Act standards and the EPA has prevented new owner, ERP, from operating due to a lack of pollution control equipment. ERP has had to sink $20mm into the facilities to comply. Choice bit, "Clarke said ERP acquired the bankrupt Magnetation without knowing the extent of the problem in Indiana, noting the EPA was still conducting its investigation. He said the plant apparently never met permit standards. 'I'll take the blame for it. Maybe we didn't do all of our due diligence. ... But it wasn't something that was easy to find,' Clarke said, adding that the Reynolds plant was violating at 14 of 18 different potential emissions locations. 'I likely would still have acquired the (Magnetation) assets if I had known. I just wouldn't have paid as much.’” That's a massive admission and some rare humility: we’re impressed. Note that Mr. Clarke just closed his purchase of the Essar Steel project in Minnesota with the intent to “blend” both operations and “become among the major players in the U.S iron ore industry.” This situation - and Mr. Clarke's move towards domestic commodity domination - is something to watch.